Global Growth

Apple Leisure Group Accelerates International Expansion; Unveils New Resort Brand

While 2018 has left much of the hospitality industry wondering if the end of a bull market is upon us, Apple Leisure Group (ALG) is doubling down on its growth trajectory.

In the first half of the year, the Newton Square, PA-based company’s development pipeline grew to 10,000 rooms after 12 new projects—both new builds and conversions—were signed in seven locations throughout Mexico, the Caribbean and Europe. In fact, it was only in May that ALG announced plans to bring its all-inclusive resort concepts to Europe with the introduction of a new three-star resort brand Amigo Hotels & Resorts, in addition to existing AMResorts’ brands Secrets Resorts & Spas and Dreams Resorts & Spas, for couples and families, respectively.

“We’ve been fully focused on Mexico and the Caribbean and our customers will want to try something new and go to Europe at some point,” explained Javier Coll, EVP and chief strategy officer. “We also have a lot of European customers and we know that at some point, they will also want an alternative to the Caribbean and we want to offer them that.”

Initially, the resorts will focus on Europe-based travelers, with which ALG already has an established reputation thanks to the company’s relationship with regional tour operators that sell AMResorts stays to European guests. Likewise, ALG has also been sending North American travelers to Europe through its own distribution channels, such as Apple Vacations and Travel Impressions as well as those of The Mark Travel Corporation, following ALG’s acquisition of the company in April.

But AMResorts’ Europe locations will also be promoted heavily to ALG’s existing North American customer base, including the company’s vacation club customers, in addition to the brick-and-mortar travel agent community with which AMResorts has long worked. The new Europe resorts will differ from those in Mexico and the Caribbean in so far as the physical attributes of the European resorts and the Europe properties will not necessarily be beachfront properties

With Jordi de las Moras, the new managing director for ALG’s European resort segment, already in place, the company is readying for its first four hotels to open in Spain. The properties, in Lanzarote, Fuerteventura and Mallorca, will be conversions, renovated to the standards of AMResorts, which will oversee brand management and sales, with the property owners’ responsible for operations.

But these Spain hotels, in addition to future properties that ALG may open across the continent, will not be fully all-inclusive as is the case with its Mexico and Caribbean properties. “Europe offers more options than the Caribbean and we understand that, so we don’t think fully all-inclusive is the right way to go,” he said. “We don’t want guests in Mallorca to worry that they’re paying for an all-inclusive resort and not using it when we know that we can offer customers another option. And that gives us an even bigger market to tap into.”

However, that isn’t to say that Coll envisions AMResorts’ Europe properties conforming to the standards of the continent’s existing all-inclusive resorts in order to compete. “We believe that, in Mexico and the Caribbean, we contributed to making the product better,” he said, adding “we wanted to offer our customers something that wasn’t already in the market and we plan to do the same in Europe.”

The resorts are located in 23 destinations throughout six countries, which will include ALG’s first property on the Caribbean island of St. Martin. A conversion project that was announced in June, the 350-room resort will reopen next year following a $20 million renovation that will include a rooftop pool with ocean views and swim-out suites. Coll anticipates that once opened, the St. Martin resort will drive strong revenues as AMResorts customers and vacation club members will have another all-inclusive option in the Caribbean while ALG and The Mark Travel Corporation’s distribution channels are already in the market.

Yet, 2018 has also seen ALG build an even greater presence in Mexico. Early last year when its existing Mexico properties already represented 58 percent of AMResorts’ revenue, ALG announced plans to sign 100 Mexico properties to its all-inclusive brands by 2020. This year, the company continues to make strides toward that objective with four new contracts announced in April for the 200-room Secrets Punta de Mita Resort & Spa and 415-room Dreams Punta Mita Resort & Spa, both slated to open in the Riviera Nayarit in late 2020. In addition, there is the 534-room Now Natura Riviera Cancun, set to open on Mexico’s Riviera Maya in late 2019, and the 407-room Secrets Marina Resort & Spa, which will debut on in the Riviera Maya’s Marina El Cid in 2020.

These four signings were followed by a strategic alliance with Mexico’s Grupo Hotelero Santa Fe (HOTEL), which officially began in July with the launch of ALG’s new Reflect Resorts & Spas, co-branded with HOTEL’s Krystal Grand brand in Punta Cancun, Los Cabos and Nuevo Vallarta.

According to Coll, the new Reflect brand will be similar to AMResorts’ Dreams and Now brands, which the company categorizes as five-star resorts and family-friendly. He noted that AMResorts “focuses on mass-market and we believe the bulk of that market travels as families or as adults-only, depending on the trip.” The five-star Secrets brand caters to the adults-only segment as does the Zoëtry brand.

The partnership with HOTEL is intended to increase international sales for the three resorts through ALG’s internal distribution channels representing 3.4 million passengers annually from the U.S. So AMResorts will oversee the brand management, sales and marketing of the resorts’ combined 1,329 rooms while HOTELS holds continued responsibility for operations. Coll would like to continue building out AMResorts’ property stable with similar deals as he views it as a means of rapid expansion into destinations where the all-inclusive group does not yet have a presence, including the English- and Dutch-speaking Caribbean. He also acknowledged that such alliances can serve as a conduit to enhancing revenue that is already healthy. He said “even owners that are managing their properties well know they can make more money and better the resort’s performance with a deal like this.”

These recent additions to AMResorts’ property portfolio will attribute to the all-inclusive group reaching 60 open resorts, totaling 24,000 rooms, in Mexico, the Caribbean and Central America by late 2019.

Despite the new deals in Mexico, Coll won’t call AMResorts a dominant player in the country’s all-inclusive market until 20 to 30 percent of market share is achieved.

So, he believes there’s still opportunity for AMResorts to further expand in the country, explaining that the company has enjoyed great success in partnering with family offices, but also great potential in FIBRAs (Mexico’s REIT equivalent) interested in hotel investment. “We know what we want and how we want to get there and we see this as another source of development because we don’t want to grow exclusively through family offices,” he added.

ALG demonstrated its ability to successfully execute strategy when it acquired The Mark Travel Corporation this year. The deal brought what had been competing brands like Funjet Vacations, United Vacations and Southwest Vacations into the ALG fold, now allowing the combined company to create greater efficiencies, especially when it comes to negotiating volume air travel. Plus, vacation brands under The Mark Travel Corporation will now sell AMResorts stays, which they didn’t previously.

The merger also included leisure travel technology group Trisept Solutions. Although travel tech has never been a mainstay of ALG’s business, it is nevertheless essential to its relationships in the retail travel community. But feedback from travel agents showed that ALG’s technology was not among its strengths; they preferred that of Trisept Solutions. “When the competition is doing something better than you, the best thing to do is adopt it,” Coll said. “At some point, you have to recognize your competitors’ successes.”